Regulators Propose Minimum Margin Requirements for Uncleared Swaps

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires banking regulators (including the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System), on the one hand, and the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission, on the other hand, to set margin requirements for uncleared swaps and security-based swaps executed by bank and non-bank swap dealers, security-based swap dealers, major swap participants and major security-based swap participants.

Recent releases by the CFTC and by the FDIC on behalf of the banking regulators contain proposed minimum initial margin and variation margin requirements for uncleared swaps and security-based swaps. The two sets of proposed rules are similar but not identical.

The deadline for comments on the FDIC rules is June 24, 2011 and the comment deadline on the CFTC rules is 60 days after their publication in the Federal Register.

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